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State regulation in the oil and gas sector in 2011 and prospects for 2012

State regulation in the oil and gas sector in 2011 and prospects for 2012

The year 2011 turned out to be rather contradictory for the oil and gas industry. On one side, preliminary results of basic parameters seem quite satisfactory. On the other side, the depletion of oil production growth potential is becoming more obvious.

Prime Minister Vladimir Putin several times mentioned that the oil industry reached its peak. This was described as an ordinary event, although in reality it reflects recognition of strategic mistakes once made.

In 2011 the trend of gradual shift in investment activities of Russian companies towards upstream-projects abroad became vivid. The problem of offsetting declining production in Western Siberia is becoming more apparent.

Eastern Siberian and shelf projects may fail to comply with forecasted parameters. The state is carried away by creation of the export infrastructure as if ignoring problems accumulating in the production segment.

Meanwhile, the government’s general mood of dealing with the state budget’s dependence on exports of hydrocarbons remains, while the demand for financial resources for state authorities is rising amid a sharply deteriorated political situation. These resources can be provided only by the oil and gas industry. Being trapped it currently urgently needs investments and state regulation incentives. Yet, the sector is needed as a cash cow only.

A new report elaborates on the following issues:

Production results of the oil and gas industry
- Dynamics of oil and gas production
- Main changes in export policies
- Situation in geological prospecting
Taxation
- Analysis of the new 60-66-90 system
- Continuation of the “patchwork” fiscal policy
Struggle for assets
- One of the most important consequences of changes in the political situation will be sharpening of struggle for undistributed assets, including deposits in the undistributed reserve
Domestic fuel market
- The year has been characterized by constant interruption of fuel supplies and growth in prices of crude and processed products
- Main reasons and real tasks of the state and large companies
Medium-term forecast of developments
taking into account the future formation of a new system of state regulation of the sector and growing state problems

The contents of the report:

Introduction	3
Chapter 1. Preliminary Production Results	5
Chapter 2. Domestic Fuel Market	21
2.1. ÂReasons for Petrol Deficit and Growth in Prices of Oil Products	21
2.2. Domestic Gas Market: Struggle for Equal Profitability	32
Chapter 3. Taxation Regulation of the Sector	36
Chapter 4. Struggle for Production	51
Chapter 5. Changes in Export Policies	66
Chapter 6. Prospects of Developments	73

Date of issue:	January 23, 2012

If you are interested to obtain please contact » Elena Kim

Other issues:

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Nord Stream 2 and Ukraine: Costs Should Decide

There has been much discussion about how Russia – Europe’s biggest gas supplier – can continue to supply gas to Europe over the coming decades in the most secure and cost efficient way. Gazprom and its European partners have decided that building two additional pipelines through the Baltic Sea (Nord Stream 2) is the best commercial solution to secure future gas supplies for the EU, where gas production continues to decline and demand is expected to grow.

Shale Revolution: Myths and Realities

The boom in shale gas production in the US and its wide-ranging influence on markets rocked the gas world. Liquefied gas deliveries were redirected, altering the already fragile balance of demand and supply in traditional markets for pipeline gas in Europe.

Liquefied Natural Gas Outlook: Expectations and Reality

World market has shown interest to liquefied gas. Russia has so far been aside of it. However, producers have announced several large LNG projects. The new study will help investigate this delicate subject and understand what is in store for LNG production and export in the nearest years.

Analytical series “The Fuel and Energy Complex of Russia”:

Outlook for Russian LNG Industry

European sanctions and Brussels’ policy of abandoning Russian energy resources plus the destroyed Baltic gas pipelines have shut in Russia a respectable volume of pipeline gas that cannot promptly be sent to alternative markets. This would seem a strong argument in favour of developing LNG production in Russia. The new NESF report must give the answer to the question about what part of the plans for dramatic increase in LNG production in Russia can be considered realistic.

Russian Energy and West One Year after Ukraine Conflict Began: Are There Connections Still?

Global politics are the framework for energy relations. However, energy projects are developed and deals are made immediately at the corporate level. It is companies that form the threads that tie nations in the energy business. It is therefore important to analyse relations between Russian and Western corporations. As long as companies from the “collective West” stay in Russia, there are still options for continuing co-operation. The latter still brings Russia fiscal revenue and markets.

Green Agenda in Russia during Bitter Conflict with West

After February 2022 the agenda was radically rewritten. Western companies began leaving Russia en masse, economic relations with the West were drastically reduced, and the Russian economy began to be pushed violently from the global economic space, hemmed in by sweeping sanctions. All that was, to put it mildly, not the best background for talking about ESG. Especially because tasks of survival and stability under unprecedented pressure became the priority in the economy. In late 2022, however, attempts to reanimate the ESG agenda already became obvious. The message is put across insistently that it is important to Russia regardless of the foreign policy situation. While earlier the “green pivot” was seen as an opportunity to attract Western investors and their technological solutions to Russia, now Keynesian reliance on domestic manufacture is discussed.

Oil and Gas Sector Regulation in 2022 and Prospects for 2023

The year 2022 was very tough for the Russian oil and gas industry. After February 24, the industry was subjected to the most severe sanctions. However, their influence was quite different. Nevertheless, the industry is entering the year 2023 with anxiety. The EU intends to continue to reduce purchases of Russian gas, which will inevitably affect Russian revenues. The launch of new LNG plants is in question due to technological sanctions. Another question is about the green agenda. Thus, it is a big question whether it is reasonable to keep insisting on accelerated energy transition in Russia.

Gazprom at the Forefront of Economic and Political Battles with Europe

Gazprom is being actively thrown out of the market. Its annual supplies to Europe have shrunk from the previous 150 billion to 65 billion cubic metres of gas. European officials assure that they have already learnt how to live without Russian gas, so they will bring its purchases down to but nominal values in 2023. Their main hope is liquefied natural gas. Today the EU must make a crucial decision: whether it has passed the point of no return in gas business with Russia and whether it is certain that its economy will endure without supplies of Russian pipeline gas. Or, on the contrary, Europe will realise after all that the gas balance will not be achieved and the payment for so headlong a rush for LNG will be disproportionate. Assessment of the potential volume of LNG that will appear on the market before the end of the current decade will be the most important factor for making the decision.

All reports for: 2015 , 14 , 13 , 12 , 11 , 10 , 09 , 08 , 07

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